Bigger role for ETFs and other passive solutions in pension funds

Survey: 66% of pension fund managers see passive investments as mature

A DWS-sponsored survey from CREATE-Research found that 66% of pension fund managers see passive investments as a mature part of their portfolio. (DWS was previously called Deutsche Asset Management.) There is a shift from market capitalisation-weighted indices towards smart beta, factor-based, ESG (environmental, social and governance) and other thematic strategies. Most pension funds now view passive investments as a mature part of their portfolio, per the survey.

The survey covered more than 150 pension plans globally, responsible for some EUR 2.9 trillion in assets under management. Sixty-six percent of pension fund managers surveyed regard passive investments as an established, mature part of their portfolio. The survey also found that: 1) The average pension fund holds 32% of investments in passive products or solutions, in the form of either index funds, passive mandates or exchange-traded funds (ETFs). 2) Among passive investors there is a shift from market capitalisation-weighted indices towards smart beta, factor-based, ESG and other thematic strategies. 3) Almost 50% of pension funds plan to increase their passive ESG allocations by more than 5% of assets under management. 4) Only 10% of survey respondents expect passive investments to replace active investments, with most expecting both to co-exist in pension portfolios.

Thorsten Michalik, DWS's co-head of global coverage group and regional head of asset management, EMEA, commented: "Over the last decade we have seen a fundamental reshaping of asset management, with some strategies becoming standardized and made easily accessible at low cost, which means investors today have an unprecedented level of choice to help them meet their asset allocation goals. It is our job at DWS to facilitate that choice and provide market-leading products and solutions for our clients."

Date

13 Jun 2018

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